3M stopping retiree medical

[Delawaredave5]

Wonder if this is the first of more to come. Right now, medical coverage is part of my Megacorp pension - not sure for how long...

3M to Change Health-Plan Options for Workers - WSJ.com

3M Co. on Friday informed retirees and workers it will stop offering a group health-insurance plan to retirees not old enough for Medicare by 2015, citing the federal health overhaul as a factor.
The St. Paul, Minn., manufacturing conglomerate also said that, for retirees old enough to qualify for Medicare, it will replace its current medical benefit with a new health-reimbursement arrangement by 2013.
The maker of Post-it notes and Scotch tape said it made the announcement now to allow retirees the chance to explore different options during this year's benefit-enrollment period, according to a memo reviewed by The Wall Street Journal. A 3M spokeswoman, Jackie Berry, confirmed the memo.
"As you know, the recently enacted health care reform law has fundamentally changed the health care insurance market," the 3M memo said. "Health care options in the marketplace have improved, and readily available individual insurance plans in the Medicare marketplace provide benefits more tailored to retirees' personal needs often at lower costs than what they pay for retiree medical coverage through 3M.

 

[Ronnieboy]

Wonder if this is the first of more to come. Right now, medical coverage is part of my Megacorp pension - not sure for how long...

IMO, the first of more to come, as companies realize they cannot afford the spiraling cost of healthcare and longer living retirees

 

[Achiever51]

3M is following what the auto industry did several years ago to its salaried retirees. Retirees under the age of 65 remain on the Corp. Health plan, paying an increasing percentage of the cost; then, at age 65, the retiree and spouse, when he or she hits 65, are dumped from the company plan, and the company gives some amount in a health spending acct to help offset costs of Medicare supplement insurance.

 

[Delawaredave5]

I guess a lot depends on what "health reimbursement arrangement" means - and if that's enough to RE on....

Starting in 2015, 3M retirees too young to qualify for Medicare will receive financial support through what the company called a "health reimbursement arrangement" instead of the group insurance plan. The company described that as an account retirees can use to purchase individual insurance through exchanges that the health law creates in 2014.

 

[Achiever51]

At my former Megacorp, the amount varies between $1750 and $1850 per year for the 65+ retiree and same for his/her 65+ spouse.

 

[Delawaredave5]

At my former Megacorp, the amount varies between $1750 and $1850 per year for the 65+ retiree and same for his/her 65+ spouse.

What about below 65 ? At my Megacorp, you can retire with unreduced pension at 58 -wonder what the "health reimbursement arrangement" would be - and how it compares to regular medical plan.

 

[dgoldenz]

Nope, not a single person predicted anything like that would happen...

 

[dex]

Wow! I never thought this type of thing would happen this fast. I thought rates for companies would go up (more - and they would try to hold the line some) and then companies would dump employees.

But, we all know that ultimately there will only be the government plan. And I'm guessing the result will be hailed as vote by citizens for it or citizens should be happy the gov't plan is there. [moderator edit]

 

[ziggy29]

Wonder if this is the first of more to come. Right now, medical coverage is part of my Megacorp pension - not sure for how long...

Not the first of more to come. This has been going on for at least 15 years. My first Megacorp pulled the plug on retiree medical around 1996 or 1997, about a year before they froze the pension.

 

[samclem]

But, we all know that ultimately there will only be the government plan. And I'm guessing the result will be hailed as vote by citizens for it or citizens should be happy the gov't plan is there. [moderator edit].

Whether by design or incompetence, the present legislation seems crafted to ensure a system meltdown sufficiently large that nearly anything will be welcomed as a replacement.

I'm not so sure that things won't be fixed in the coming years with a solution a lot different from the recent legislation. It depends on whether what has happened to date and what is about to happen (politically and in the health-care sphere) will sufficiently shock ideologues on both sides to accept a compromise.

 

[dgoldenz]

Whether by design or incompetence, the present legislation seems crafted to ensure a system meltdown sufficiently large that nearly anything will be welcomed as a replacement.

I'm not so sure that things won't be fixed in the coming years with a solution a lot different from the recent legislation. It depends on whether what has happened to date and what is about to happen (politically and in the health-care sphere) will sufficiently shock ideologues on both sides to accept a compromise.

Just wait until the middle class finds out their health insurance will cost $1500/month come 2014.

 

[Bikerdude]

Not the first of more to come. This has been going on for at least 15 years. My first Megacorp pulled the plug on retiree medical around 1996 or 1997, about a year before they froze the pension.

+1. Nothing new.

 

[samclem]

Just wait until the middle class finds out their health insurance will cost $1500/month come 2014.

A family of four earning $80k/year would have a max premium of $700 per month for the "silver plan" (just essential benefits). But, above that income the subsidies phase out entirely and rates go up.

 

[dgoldenz]

A family of four earning $80k/year would have a max premium of $700 per month for the "silver plan" (just essential benefits). But, above that income the subsidies phase out entirely and rates go up.

And a husband/wife with no kids earning $60k will have to pay 100% of the premiums with no subsidy, likely around $1000/month. Even $100k with two kids living in an area like LA/NY/Chicago/Northern VA isn't much....and shelling out $1500/month in after-tax income will be a killer.

 

[M Paquette]

Wow! I never thought this type of thing would happen this fast. I thought rates for companies would go up (more - and they would try to hold the line some) and then companies would dump employees.

Eh? This has been going on for a long time. The trend for employers for the last 15 years or so has been to drop retiree medical benefits (along with pension plans and any other defined benefits). After leaving the Navy, I've never worked anywhere that had ANY sort of retiree benefits. Retiring from my last employer was exactly the same as quitting.

The whole employer-sponsored medical insurance thing has been slowly shrinking as well. Here's a peek at the trend for 2000-2005, for example.

Health insurance eroding for working families: Employer-provided coverage declines for fifth consecu

More Americans are uninsured because of the continued erosion in employer-provided health insurance, the most prominent form of U.S. health insurance. The number of people without health insurance grew significantly for the fifth year in a row. Nearly 46.6 million Americans were uninsured in 2005—up almost 7 million since 2000. The rate of those without insurance has grown 1.7 percentage points during this period, from 14.2% in 2000 to 15.9% in 2005.

The percent of people with employer-provided health insurance also fell for the fifth year in a row, 4.1 percentage points in total. Over 3 million fewer people of all ages had employer-provided insurance in 2005 than in 2000 as a result of rising health costs coupled with weak labor demand. However, this decline does not take into account population growth. As many as 9 million more people would have had employer-provided health insurance in 2005 if the coverage rate had remained at the 2000 level.

 

[M Paquette]

Just wait until the middle class finds out their health insurance will cost $1500/month come 2014.

My cost will go DOWN that year?

 

[traineeinvestor]

While this is bad news for those who were benefitting from such plans (or expected to), there are groups who benefit when companies make these decisions:

1. current and future employees - if the total cost of employing people goes down, more people are likely to be employed and the risk of offshoreing the jobs gets reduced (at least in theory);and

2. reduced costs to companies is good news for investors - which I would expect includes just about everyone with an investment in equities (either directly or through a fund).

Also, as others have said this is not a new development.

 

[Emeritus]

While this is bad news for those who were benefitting from such plans (or expected to), there are groups who benefit when companies make these decisions:

1. current and future employees - if the total cost of employing people goes down, more people are likely to be employed and the risk of offshoreing the jobs gets reduced (at least in theory);and

2. reduced costs to companies is good news for investors - which I would expect includes just about everyone with an investment in equities (either directly or through a fund).

Also, as others have said this is not a new development.

Reintroducing slavery would have much the same effects. No slave ever complained about not having a job. Investors loved it.

 

[MichaelB]

This will continue until companies are no longer involved in health care and just give employees a bit more salary but call it health care contributions.

Just like pensions.

The will blame outsourcing, health care regulation, or anything else that resonates, but they will never call it what it is – profit maximization.

Providing health care through employment is a bad idea. Not working together to develop a functional alternative is another bad idea. I actually think it is good for business to get out of health care, but to make political commentary or not be honest about it is disappointing.

 

[Midpack]

Not the first of more to come. This has been going on for at least 15 years. My first Megacorp pulled the plug on retiree medical around 1996 or 1997, about a year before they froze the pension.

Exactly the same for me, the Fortune 500 company that I used to work for pulled the plug on retiree health care in the mid-90's. Don't know if they froze pensions or not since I don't work with them anymore.

 

[Midpack]

Providing health care through employment is a bad idea. Not working together to develop a functional alternative is another bad idea. I actually think it is good for business to get out of health care, but to make political commentary or not be honest about it is disappointing.

I agree. Most people are way too insulated from what health care costs. Over the years my employees have paid from 12-18% of their total health care costs, and they think that's outrageous! They really have no idea and showing them makes no difference at all more often than not...they don't want to know.

The quote below is evidence of same, it will be many years if at all before labor costs go down (although some employers may try to do so). Private companies pay health care "premiums" or directly on behalf of employees right now. As these companies eliminate health care, they will gladly give the money (some or part) to employees to buy government or other private health care on their own. I would gladly give what we pay in premiums to our employees to get out from those costs, we would be money ahead every year ahead by avoiding the higher inflation associated with health care (averaging about 9-10% per year).

And employees can then be mad at the government for spiraling health care increases and/or reduced services - private companies will be thrilled to get out of the middle...

...if the total cost of employing people goes down, more people are likely to be employed and the risk of offshoreing the jobs gets reduced (at least in theory)

 

[samclem]

Providing health care through employment is a bad idea.

Absolutely. Hopefully in a year or two we'll have a chance to re-do the "reform" before the present ship hits the rocks. AT that time, lets all take a deep breath and remember this point of common ground.

FWIW, during the last election one of the presidential candidates campaigned on getting employers out of the health care biz. The other candidate got some cheap political mileage out of it ("My opponent wants you to lose your employer-provided health care"), making it very hard to do the commonsense thing later. But, that's water over the dam now . . .

 

[Htown Harry]

Eh? This has been going on for a long time. The trend for employers for the last 15 years or so has been to drop retiree medical benefits (along with pension plans and any other defined benefits)...

The whole employer-sponsored medical insurance thing has been slowly shrinking as well. Here's a peek at the trend for 2000-2005, for example.

Health insurance eroding for working families: Employer-provided coverage declines for fifth consecu

Here's a chart that specifically shows the long term trend for retiree health benefits:

Employer Health Benefits 2010 Annual Survey - Kaiser Family Foundation

 

[M Paquette]

Absolutely. Hopefully in a year or two we'll have a chance to re-do the "reform" before the present ship hits the rocks. AT that time, lets all take a deep breath and remember this point of common ground.

Oh, joy. I think I'll just go soak my head in a bucket of water.

 

[samclem]

Oh, joy. I think I'll just go soak my head in a bucket of water.

?? Okay. Hey, it's one procedure that is fully covered under all plans and requires no co-pay.